Tom McPhail, head of pension research at the company, said that the poll showed people were underestimating the amount of tax they would have to pay despite the reforms, as only 25 per cent of each lump is tax free and the rest is taxed at a marginal rate.

The poll of 1,247 British adults aged 45 to 65 found that those wanting to cash in their savings were most likely spend the money on holidays, with one in five saying that is how they would use the cash.

Another 12 per cent said they would use it for DIY projects, 14 per cent to help their children and eight said they would spend some on new cars.

One in four said they would save a portion of the money, whilst 13 per cent would use some of it to pay off existing debts.

Investment in property would be the main reason to cash in their savings for 16 per cent, the survey found.

The ability to use savings as a bank account builds on the pension reforms Mr Osborne announced in his Budget, under which he scrapped rules that force most Britons to use their pension savings to buy an annuity.

At the time, ministers emphasised that pensioners would be able to draw down the entirety of their pension pots to save, invest in property or even buy a Lamborghini.

Critics have questioned whether people could end up struggling financially if they spend all their money after retiring.